A
court ruled earlier this year that Vonage was infringing some
Verizon patents relating to its Voice over Internet Protocol (VoIP)
systems. It has said that its business would be able to carry on
and that it could find technical alternatives to the infringing
technology. But in a court filing just published on the orders of
the Court of Appeals for the Federal District Court for the Eastern
District of Virginia, Vonage admits that it has no technical
fix.
"While Vonage has been considering design around options, it
does not have a design that can be implemented immediately, if such
a design around is even feasible," said the filing. "In fact,
current design around options contemplated could take many
months."
In addition to the general ruling on patents, Verizon was
granted an injunction stopping Vonage using its technology for new
customers pending Vonage's appeal of the case.
Vonage appealed against that injunction, saying that the rate of
customer change in its industry is so fast that a ban on new
customers would be fatal for the firm. It was given an extra two
weeks to convince the court of its case.
The revelation that there is no workaround came in documents
filed with the court as part of that process, in which it requests
that the injunction be lifted until the full appeal has been heard.
The court ordered the release of some of the filed documents.
The documents, which argue against a permanent injunction on the
use of the patented technology, contain predictions of the
consequences an injunction would have, though with some words
blanked out in the publicly released versions.
"Even if Vonage was somehow able to implement a design around,
and was able to ultimately prevail on appeal, it would have no hope
of regaining its lost customers, or its lost goodwill, and its loss
of revenue would be permanent and [blank]," said the documents.
"The injunction would [blank] Vonage before it even has the
opportunity to challenge the injunction and underlying trial on
appeal."
Vonage floated on the stock market last year but has had a
turbulent time, with its shares falling in value from $17 at float
to around $3 now. Its chief executive, Michael Snyder, left the
company last week and founder Jeffrey Citron took over.
In the original ruling in March, Vonage was ordered to pay $58
million in damages for patent violation. The patents involved in
the case relate to the connection between Vonage's network and the
standard telephone network. Patents relating to billing systems
were ruled not to have been violated.
